Residential auction activity remains relatively upbeat, with 285 properties offered at the auctions monitored by interest.co.nz over the week of 23-29 September.
That was almost unchanged from the 284 properties offered the previous week and up slightly on the 274 offered the week before that.
However the sales rate eased back slightly, with 114 properties selling under the hammer at the latest auctions giving an overall sales rate of 40%, down from 43% the previous week and 47% the week before that.
It also appears that the prices being paid are on the up, with 47% of the properties that sold at the latest auctions achieving prices that were equal to or above their rating valuations, compared to 39% the previous week and 34% the week before that.
If that trend continues were are likely to see selling prices that are above rating their valuations passing the 50% mark in the next few weeks.
Overall, the auction rooms have become progressively busier over the last few weeks as the market has moved from winter to spring, suggesting a reasonably positive start to the summer selling season could be in the offing.
The chart below shows the district-by-district results for all of the auctions monitored by interest.co.nz, while details of the individual properties offered, including the selling prices and rating valuations of those that sold, are available on our Residential Auction Results page.
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141 Comments
It also appears that the prices being paid are on the up
Higher for longer...?
I watched a few auctions on the shore this week and I've defintely seen a shift on buyers willingness to bid. On some 'desirable' properties there were bidders fighting it out pushing the price high, well over CV. It's the opposite to what you'd think would be happening by reading many of the comments here...
Due to recent unprecedented demand, this scheme is now fully subscribed and therefore we will not be accepting any new applications
Yeah there's strong demand with those wanting to buy houses? It's abit scary that people are really willing go in debt up to their eyeballs with the Govt just to get a property.
Well, considering there has been an uptick in FHB purchases lately, many with low equity and up to 25% help from KO, as indicated by this fund being exhausted, I’d suggest this will leave another hefty hole in the dollar demand for houses. The underlying demand is still there, people need somewhere to live.
It's a bit scary that people are really willing to go into debt up to their eyeballs with the bank just to get a home...
What are people meant to do? It's been proven over many years that the government will do anything to stop house prices falling and encourage investors.
FHB have to compete with everyone. I watched an old lady out bid 2 younger couples at auction on a 4 bed, 2 bath, big garage, 900sqm section property. Pushing the price $100k over recent similar sales in the process
Most people just want a house so they don't have to move every 12 months and can get a pet. Covid lock downs showed us that people will hoard necessities to profit. It's time to stop hoarding houses.
"FHB have to compete with everyone. I watched an old lady out bid 2 younger couples at auction on a 4 bed, 2 bath, big garage, 900sqm section property. Pushing the price $100k over recent similar sales in the process"
"It's time to stop hoarding houses."
Only government policy can reduce own-occupier buyers being constantly outbid by non owner occupier buyers.
The incumbent government have put policies in place that level the playing field in the existing house market between owner occupier buyers and non owner occupier buyers, by removing the tax advantage for non owner occupier buyers. The main opposition party wants to restore the tax advantage to non owner occupier buyers and give them an advantage over owner occupier buyers.
Something to think about.
If the residents of NZ want to encourage more residential ownership by residential owner occupiers then it comes down to government priorities and government policies.
Singapore focuses on encouraging resident owner occupiers and less on owners of multiple residential dwellings, non resident owners with their tax policies.
1) Property taxes (which we call rates)
i) note that they differentiate between owner occupied and non owner occupied,
ii) and they are on progressive rates - the higher the imputed rent, the higher the rate to determine property taxes (which we call them rates in NZ)
https://www.gov.sg/.../property-tax-on-residential-property
https://www.iras.gov.sg/.../property.../property-tax-rates
Imagine bringing in a progressive rate system in NZ to calculate rates.
2) Stamp duty is differentiated between
1) citizens vs residents vs non resident buyers
2) first, or any property beyond their first property
https://www.propertyguru.com.sg/.../calculators/stamp-duty
https://twitter.com/GRomePow/status/1643083095376285698?s=20
Yep. All makes sense. Shame it won’t happen
Shame it won’t happen
It is on offer - look at TOP's LVT and tax switch policy. Raf has been brave enough to put it up as an option for the electorate, anyone that complains about high house prices might be better off looking in the mirror for the reason.
LVT similar to the property tax in SG except it is only using just the land value (encourages development) as opposed to imputed rent (which incidentally was pretty much TOP's old version of the same policy).
Is that the same land value tax as proposed in the 1850 Communist Manifesto?
1) Property taxes (which we call rates)
Rates here are not interchangeable with property taxes linked the way you state. Rates are for services provided, not directly driven by property value as the SG property taxes. But yes, we could add a property tax operated the way SG does. My preference would be for an LVT and do away with the hassle of calculating imputed rent etc.
"My preference would be for an LVT."
One potential unintended consequence of a land value tax is that this could be gamed by builders / developers. They would be incentivised to game the tax by building up and reducing the land footprint to reduce the land value tax impact.
Subject to building codes, could this result in townhouses which a 3 levels or more or other similar unintended consequences? (I'm unfamiliar with building regulations).
Also the Singapore tax system makes it more expensive for those hoarding of investment properties by non owner occupiers and gives higher priority to owner occupiers. To my knowledge a LVT does not do that.
Once adjusted for inflation, lets see what this Dead Cat Bounce amounts to in minus percentage points once it's spent. It's looking more and more a story of interest rates even higher and for much longer than most anticipated.
Yet despite rates prices are nudging back up. I suspect we'll see another month on the HPI which shows increases, 4 months in a row looking like a trend?
Were you even around in the high inflation era of the 70s, when adjusted for inflation, house prices fell 40%?
https://www.greaterauckland.org.nz/2016/07/11/remember-the-last-time-ho….
Thought not.
Yeah cool mate, tell that to someone trying to buy a house but see prices rising and going further out of reach.
It'd be great if you'd use the same logic with your TDs... been going backwards for a long time.
Nothing wrong with TD's mate, billions of dollars pouring into them as we speak. Once you have the mortgage paid off you don't need to take any risk and the TD just pays out monthly and if its big enough you can actually live on it. How do you put a price on not having to work ?
Apparently auckland houses increased by 2000 percent over 15 years till 1987. From $7000 to $130k for an average house. The average house is now 900k.
Even a 40 percent drop wont hurt retired poppys house value.
From the outset, for 6-1/2 years we saved hard in a 1 bedroom flat (using TDs in fact) and bought our house in 1997 to live in and raise a family. It's a well maintained weatherboard 60s house and it's future value does not keep us awake at night.
Let me guess. You paid 200,000 for a house that's now worth over one million dollars. At the same time its given you a place "to live in and raise a family"
But you still come on interest.co to blame others for the lack of investment options and think we should be happy with a term deposit certificate.... framed and proudly hung on a wall
You're sounding very bitter. What's wrong with FHB's saving using TD's? Much like Nifty1 and Pa1nter, you seem to have a problem with this - why?
Should FHB's store money in a cheque account? Is that seriously your investment advice? is this all you've got to offer FHB's as a means of reducing the eventual net interest bill?
It takes little effort to borrow from your future but it takes sheer effort and discipline to save. I speak from experience.
I suggest you ditch the envy. It's clouding your judgment.
I'm very jealous, very envious
/Sarc
We only adjust house prices for inflation in a rising market. If the market is stagnant and general inflation is high, then we revert to nominal house prices.
Inflation is irrelevant, there is no "Adjustment". You have a house price and you have what it is you are getting paid to work with,that's it. Wages have never kept up with house prices end of story or a house would still be down at 4x income when realistically its now at like 12x income because only one person used to have to work to pay the mortgage.
Wages have never kept up with house prices end of story
Never in your lifetime maybe.
Never in anyone's lifetime from this point onwards. House prices would need to drop to 25% of what they are currently or your wages would have to go up four times tomorrow, its never going to happen. If that's your thinking you need a Plan B.
Disagree.
Vote for the tax shift and let land attracted regular tax v.s. being the tax shelter it is today. This is offset by less income tax, which is effectively a pay increase.
In one tick of a box in two weeks lower land prices and higher income.
Vote TOP.
House price x income is inadequate affordability calc when ignoring interest rates. I was that one person back in the 1970s, I had 3 jobs going to pay the 3 mortgages (10% deposit)
Sounds like frivolousness to me but hey all power to you if you were working 120 hours per week, but could only save a 10% deposit back when houses were 2 - 3 x the average wage. 3 mortgages is a bit over the top.
About 80hrs average, incl. OT (penal rates) + 2 part time jobs. First home was 4x day job wage.
When you start with nothing the first $100 to $1000 takes a lot longer than the 1st to 2nd $million.
Edit: as I've previously mentioned, back then you couldn't easily get a mortgage to 80-90% unless you were a public servant or similar with cheap mge interest. Banks went to maybe 60-67% on first mge, another 15% on 2nd. Getting the last 10% to bridge to your deposit was tough, often solicitors trust accounts. All at increasing interest rates, cheapest was 15%
Genuine question - why didn't you just save for longer until you had a 33% deposit then?
Goes back to my original comment I think? People were just as frivolous back then as they claim young people are today.
There's no reason at all why someone buying back then needed to have 2 - 3 mortgages. They could have accumulated 1 years worth of wages in savings, and taken out 1 mortgage. Term deposit rates were quite generous back then too.
So it took from the 1974 peak 20 years to recover. This is kink of the outcome we need here, flat nominal and declining real prices. It’s the only way that the country will still be a good place to live without too many social issues.
This is one of the big developers I alluded to several months ago as being in quite a bit of trouble. Didn’t want to name names then, but it’s out in the open now.
https://www.nzherald.co.nz/nz/ockham-residentials-the-feynman-big-auckl…
These customers were fortunate. They got their hard saved deposits returned! More not so fortunate stories are no doubt brewing in the shadows of the now (to big to fail) construction sector.
Yeah. And yes things will get really ugly.
unfortunately there are lots of well meaning but naive people who will get burnt.
Pity there has been almost a total absence of articles anywhere in the media pointing to all this. Revenue and profit comes before warning on moral hazard.
Why the alarm? It was an apartment project that required a set amount of pre-sales to happen prior to construction. It didn’t manage that so they pull the plans, take a hit on the money spent on planning, marketing etc and move on.
Hardly Armageddon
Not talking about this development in particular. Rather the general risks of buying off the plans in a slumping housing market . Trust me, there will be lots of issues over the next 12 months.
"there will be lots of issues over the next 12 months. "
People who choose to take their cues on the housing market from recent house price changes, don't see what you're seeing or can't see what is coming.
Already seeing the odd posts on FHB Facebook page about buyers off the plans in 2021 not qualifying for the same finance amounts when they're about to settle.
20% of target presales level. Failure to get sufficient pre-sales to get financing for the project.
If there is a shortage of housing as many claim, this development should have been selling like hotcakes, and been sold out.
This example illustrates that the issue is not a shortage of housing, the issue is a shortage of AFFORDABLE housing.
Luxon note to self - "absent of viable hard won alternatives, as a country, we're financially screwed if something prevents us selling overpriced houses to one and other"
It's all Kiwis know. It's the environment that has been engineered by successive governments. House price go up, take equity, buy another house. We can't really blame the citizens. It's the political environment that has created this shit show. The only good thing I've seen in the last few decades (interest deductibility), is about to be reset... it's head scratching stuff.
Of course we can blame the citizens for being ignorant. The government are just citizens too, sucked in by the same narrative. If anything is being engineered it's not by the government, they're just ignorant puppets too. We're all being played against each other.
If anything we've all been corrupted by corrupt money and false beliefs.
Hold on a minute, aren't we in spring? Actually a month into it... these numbers are those of peak winter...
Hold on a minute, where's the crash you've been telling us would happen?
....be patient. Painful adjustments can often take several years to play out.
Nifty1, you'd make a great National politician. Affordability is mind boggling, and to your credit, you acknowledge that. National are clearly pro property with out actually saying it. It's looking like the opportunities for our young is overseas. The game is rigged here in NZ with too much invested in RP. Sure, FHB can grind it out and secure a townhouse etc... but why? It's looking like a no brainer isn't it?
If you've followed my comments I've said the games rigged, the Govt & RBNZ do whatever they can to prop up the market. We've seen it most recently with mass immigration, shared ownership schemes, tweaks to CCCFA, tweaks to LVR rules, tweaks to low deposit lending. Banks, Real estate firms, Media of course all play their part aswell.
THAT DROSS TRIGGERD THE GFC.
We learn NOTHING!
People don’t learn, people move on. The system will never change.
Yes all that to protect the banking overlords profits at the expense of voting kiwis. One notes that clearance and sales are still FOOPed. The thing the speculative dont yet really grasp is its not that people dont want to buy...they cant qualify.
The standoff continues. Rate push higher, do the math....
Rate push higher, do the math....
I wonder if gun mathematicians make the best investors.
Property promoters may not be the best investors.
1) An article from Greg Ninness:
https://i.stuff.co.nz/business/money/6051241/Property-Guru-declares-him…
2) https://i.stuff.co.nz/business/7580992/Property-high-flier-bankrupted
There were also a number of property developers that were also bankrupted in the previous cycle. Some have since re-entered the property market.
Will be interesting to watch for the reports in the next few years to see who got caught swimming naked when the tide went out.
Investment unsupported by financial modeling or inside information is gambling.
That's still gambling, just with better odds.
"National are clearly pro property with out actually saying it. "
By not saying it, they are trying to gain the swing votes by those groups where higher house prices would be detrimental to them -
- those who are looking to buy such as first home buyers,
- those renters who are unable to afford to buy at current price levels
The incumbent government are pro-affordable housing. In the existing house market, they are pro-owner occupier buyer (vs non owner occupier buyers).
Given the fact housing has already dipped so much and we’re still yet to feel the real impacts of this economic climate I would ask…
Are you deliberately naive or just clinging onto anything that will allow you time to dump on some poor FHB?
Many property hoarders are just sooo deeply all in, on house collecting and been sucked soo deeply down the "can't lose" rabbit Warren of the High Priest Tone the Comb........ their life long belief system has been shook to the core.
They are out on a branch and the twigs getting thinner as the DTIs shrink towards 4x.
To see this epic home cost reset, as only part way through atm, has the many overleveraged still shaking and shuddering in disbelief, rub your eyes twice stuff!
"Tony A told us this was impossible" ......cue the sobbing....
No crash happens in a straight line and from Nov, as the rampant OCR gets further hoisted up the mast, another few Spruiker rungs will be smashed through.
Winston First WILL KYBOSH their hopes of further taxpayer handouts and tax rinsing.
Almost worth swallowing the dead rat and voting WP.
Buyers : Don't get Spruiked again" as these Scrotes did in 2020 and 2021.
Dont take the rat bait. WAIT.
WAIT.
It's unfolding in slow motion, with those exposed hanging onto their vapor equity for grim death.
Less houses put up for auction than last week and sales rate fell ... green shoots
Looks like 114 people managed to get out before the next phase of the crash. If any of these people purchased at highs they would be 20% down on the deal, as refinancing season hits the market we will see a flood of properties trying to get fewer buyers this is when the crash will accelerate.
The crash hasn't even happened so not sure how it can accelerate? The next HPI will likely show house prices up over 4 months across much of NZ...
Are your sales picking up on the shore?
Sales of what HM? Are you trying to make more BS insinuations.
Why are you so obsessed with the North Shore market then? Most home owners have a passing interest in the market that they own their house in, but your interest seems to go far beyond that.
Or are you in negative equity so keen for the market to pick up there? Sorry if you are
Your assumptions & insinuations are pathetic... quite sad really that's what you have to resort to. You get mad at others doing it yet here you are...
Ok. So if I am wrong maybe you could explain why I am wrong - why are you so obsessed with the North Shore market.
How have I been 'so obsessed' with the north shore? I've commented here & there on it reflecting on auction results. You've gone on this tangent many times throwing around accusations, you're like ITGUY accussing me of being HW2...it's completley unfounded and quite frankly boring.
You are always going on about it. You are also generally very pro-property in your viewpoints. It’s curious. Anyway I guess it’s none of my business
Hey nifty you should know that if you disagree with the doom and gloom narrative, even with no vested interest and stats to back up your comments, you’ll get slammed and picked apart. Especially by sad little people trying to ‘figure you out’ - v sad
Wow.
Have you not noticed that many places up and down New Zealand house price’s have crash 20% or more. Many people are now refinancing at much higher rate some will have to sell and investors over leveraged will be the first this is how the crash speed up.I am surprised Nifty1 that you didn’t know price’s had dropped over last couple of years.
I'm surprised you won't acknowledge what's been happening over the last 3 months+ & right now... We all know what happened in past, living in the present mate.
How much has it gone looks more like a flat line, FHB houses were down 21k in last two month.The market is dead and will start its way back down before year end. If you are over leveraged now would be best time to sell as in the coming months the market will be flooded by people and investors trying to get out before large numbers have to refinance with massive weekly payment increases.
I've just sold a house at auction in Auckland on behalf of my mother's estate. Dozens turned up and there were 9 registers bidders. It needed some renovation, but we still got exactly what we thought it would go for. Extremely pleased with the result.
Congratulations - yet again. Not that it matters greatly but when you posted the same story a week ago there were 8 registered bidders?
Will there be 10 next week?
Hey Dtrh- prices have come back but I don’t think anyone can use the word crash can they? Not even retreated past those stupid gains during covid have they?
Crash trigger’s many on here. Down Around 33% taking account of inflation but with rates staying around this level and inflation way above 2% level the next phase of downturn will be quite spectacular, NZRB can’t lower rates as NZD will become Monopoly money (notice I use downturn and not crash)
"prices have come back but I don’t think anyone can use the word crash can they? Not even retreated past those stupid gains during covid have they? "
By looking merely at house price changes, unaffected people may not realise the financial impact on the owner occupier buyers of 2020-2021.
For owner occupier buyers of 2020-2021, this is the potential situation that they are now in
A real life example:
A friend purchased an owner occupier house in Auckland as an upgrade in Aug 2021.
1) at time of purchase
House price: 3,000,000
Deposit (20%): 600,000
Mortgage: 2,400,000
2) position today
House valuation: 2,550,000 (15% fall)
Mortgage 2,400,000 (assumed to be interest only for illustration)
Equity: 150,000 (fall in equity value of 75%)
Now that assumes that they can continue to hold on until house prices recover. If they are unable to hold on (e.g. due to inability to continue mortgage payments due to rising mortgage payments, loss of job, reduction in household income, etc), then they may need to sell.
Equity above: 150,000
Sales commissions: 65,000 (2.5% of house price)
Remaining equity 85,000 (fall in equity value of 86%, or $515,000)
Now how can they afford to buy? 85,000 is only 8.5% of the median house price in Auckland. (Note that previously they were in a high end suburb, well above the median house price in Auckland.) They will likely have to rent.
Some others are currently in negative equity (i.e loss of over 100% of their equity) before the cost of commissions for sale, and if they were unable to hold on, and forced to sell, they would still have an amount owing to their lender.
A 90% LVR owner occupier buyer at the peak in Wellington could be experiencing at 220% loss of their equity at current valuations. If they are unable to hold on, then that loss could increase to over 245% due to sale costs.
A fall in the owner occupiers equity between 75 - 245% is a financial crash in their equity. Those in negative equity and still owe money to the bank will most likely need to rent. Some may now need social housing.
Some recent reports
1) https://www.nzherald.co.nz/business/mortgage-shock-900fortnight-rise-fo…
2) https://www.oneroof.co.nz/news/south-auckland-home-suffers-near-1m-hit-… - assuming an 80% LVR, this owner lost an estimated 224% of their equity after sales costs
3) https://www.nzherald.co.nz/nz/brings-tears-to-my-eyes-family-consider-s…
This is the collateral damage of owner occupier buyers of 2020-2021.
Crickets...but a real scenario.
The destruction of decades of building equity or the bank of mum and dad passed, and destroyed. Those on the winning side will only care about the color of their new tesla, and that also has to date avoided tax.
HFL...do the math.
Hi Matt, a crash or a bear market is certified by a drop of 20% or more.
Much of NZ is down way more than this figure. Around my part of West Auckland, values have changed downwards at upto 35% below the 2021 valuations and actual sales.
This is a really bad crash and still not done. With Debt becoming increasingly more expensive, the ability to borrow continues to become compressed.
So the current transitory steady state market, is an ideal time for those financially overcommitted/overleveraged in housing to escape the tightening vice grip of increasing interest rates.
I get all that but I am not seeing the blood in the streets as a ‘crash’ would suggest. In fact I am seeing more and more people entering the property scene - most are being tested at 10 or 11%. Debt is no longer cheap but demand and supply is still out of whack and there is money out there. I have no vested interested whatsoever but I am not seeing things worsening. There will be some damage around the fringes as always ( as per the example above of someone with a 2.4 mil mortgage!) but I think we’re through the worst.
Where are all the mortgagee sales???
The DGM promised us that very high volumes of mortgagee sales would have occurred by now…… But, instead, mortgagee sales have remained at a low level - and currently there’s increased evidence of increasing house sales and prices.
DGM are a bunch of noisy bullshitters.
TTP
"bullshitters"
Rich coming from a convicted property fraudster.
https://comcom.govt.nz/case-register/case-register-entries/property-bro…
Wow AG,
- The property vampire won't like that disinfectant of sunlight on him!
He has probably combusted and now a pile of ashes?
Fair point. Still low. As posted elsewhere for record my rough tracking since October last year.
October = 26
March = 37
Sat around 35 - 40 on most of my searches between March and August. Seemed steady.
Today = 49.
It's not a clear total as I haven't been differentiating multiple properties on one listing e.g. "sections" in s subdivision and apartments (pural). Broad quick look only.
Rewatched the The Big Short last night. The bit where they go out and check directly on the quality of the loans made visiting housing developments and mortgage writers. Just wow.
Funny, all these big brains working out the market, but it all came back to basic maths and honesty (and greed). Jargon and complexity just a veneered over the top.
Interest rates not easing thats for sure... if as a poster above suggests the market is rigged.... the rigging must be under some tension presently......lol
House prices won't be getting any cheaper, not where I live anyway.
The cost of materials, consents, conveyancing, labour and transport just keep on going up, and the local council in their wisdom have decided to cease approving new subdivisions because the infrastructure isn't in place.
A chicken and egg situation.
It's because of all the council administered Flood risk maps (plains and prone) are currently being rejigged, reconfigured and EXPANDED massively.
Would hate to be the last bagholder of these future, naturally/climate change occurring or council designated 'No Build" swamps.
Land and Housing Speculation can be a biatch!
It will burn many, in the multiyear, valuation collapse, that started in 2021!!
Still, silver linings, the burgeoning long legged Heron and other swamps birds viewings, could be a new booming sector?
Give it up mate, prices are already rising. As I have always said, decent quality builds in elevated sunny positions will always go up in value. Yes unfortunately there are now bag holders is flood prone areas but that's called due diligence.
Take the opportunity Zwifter to deleverage. Its not too late to save your eternal and financial bacon.
But probably....... you're a student of the Property bible school (None wrong with the real Bible) of Tony and Ashley and far too deep down the Oneroof vest interest warren......
A few on here are suggesting house prices have now bottomed and we're now in an up-trend. If this be the case then consumers must be adjusting to a new normal of higher interest rates for much longer - right?
Also, with the RBNZ of the view any reduction in OCR would risk setting the housing market on fire, there's less a case to reduce them - they'll simply stay high.
With this in mind, a potential net 8%pa or more, plus ever increasing rates and insurance is now going out the door for years. In the end, how many times over are FHB's paying for todays houses? What a waste of money.
I feel many FHB's are going to awaken to the reality they've been played. The RBNZ accepts a degree of collateral damage in order to protect the wider financial system.
https://www.stuff.co.nz/business/99408539/reserve-bank-warns-its-not-ou…
Who are the real pawns here?
Prices have lifted a little over the past few months. I suspect it is a dead cat bounce. But only time will tell.
Yes - totally agree, its a dead cat bounce. It's normal to see upward swings during down-trends as the herd have their own unique interpretations of value and varying degrees of FOMO. It's what the picture looks like heading into next winter that will be telling.
Its also very evident the investor class aren't in any hurry to buy at todays prices.
Indeed. They need real equity....
When is a dead cat bounce not a dead cat bounce... how many months of increases in house prices do you want to see? Didn't you insinuate before there's actually been no bounce anyway due to inflation?
Nifty1 - for obvious reasons, you're now conveniently confused.
Can you just answer the question re: dead cat bounce?
I already have - LOL!
by Retired-Poppy | 30th Sep 23, 12:07pm - "It's what the picture looks like heading into next winter that will be telling"
The cat is landing in the next month or two. Heard it from a very reliable source that Jan 2024 is optimal buying time.
FHB to consider making low ball offers from early 2024 wasn't it? When do you think is the best time? Oh that's right, you don't make predictions - just critique others....
If I'm wrong, I'll own it - don't worry. I'm good like that :)
You'll be right eventually, just like that broken clock.
You can make a low ball offer any time. The best odds of success of that will come from determining the willingness of the vendor, not guessing the best time. A distressed market may help, but you're not guaranteed your vendor is willing to meet your low ball offer.
For FHB's, patience is key at this point - there is no need to "be quick". Getting that lowball offer over the line eventually when the market is most vulnerable IS very much about timing. Speculators/Investors (the ones you infer money works hard for them) guessed their best time was to enter when they did, now its FHB's turn to do the same.
Let it go now Pa1nter. We've both shared our views.
I feel most investors are looking at specific opportunity, and less so the timing of it turning up.
If someone can determine value at any point, they're best not to dilly dally.
A strategy of waiting for the market to turn is far more rare, at this point, we are almost the duration of two full cycles from what history should dictate. The good people will be another 6-12 months into paying rent, still waiting.
"I will tell you the secret to getting rich. You try to be greedy when others are fearful and you try to be fearful when others are greedy"- Warren Buffett
It's about timing Pa1nter - timing :)
Now, how does your patterns, trends and other goodness knows what else you say stack up against the advice of the more experienced?
Are people buying their first house, or trying to be the world's most successful value investor?
As an approach to life, which is finite, with a finite working lifespan, not pissing about generally bests hesitation waiting for the market to deliver their preferred conditions. The longer someone holds off buying a property, usually the harder it gets, and the mortgage longer. Had I taken the sort of advice you're peddling, I'd be significantly worse off, in many ways.
Buying in the super distressed sort of market we're waiting for, would've been a way harder decision, and the banks far less cuddly.
"Had I taken the sort of advice you're peddling, I'd be significantly worse off, in many ways"
Yes, that's because you would have given up. Saving money - its too HAAAAAAAAAARD.....
Entitled.....
No, it's cause I'd have been older, with all the added complications I listed. I wouldn't have been able to move onto more lucrative, less house owner uses of my efforts. I'd be working a lot harder now, that's for sure.
Life's been a lot harder than saving for a house, giving up didn't really feature as much of an option.
Uh-huh.....
RP bought a property in 1997, he's well qualified to give advice to those trying to buy in 2023...
Yeah right!!!! Deluded
A decade of almost flat pricing too.
I bought at a time when some people were making similar detracting noises, in a market that was deemed "too expensive", but it would've been 6 years until the supposed "ideal" market conditions presented themself again. The extra rent paid would've come to a whole nother deposit.
It's crazy how muddled the narrative is for young people though. On one hand people like yourself are suggesting that FHB should buy when they're ready to, which makes sense because life and health doesn't wait for you.
But on the other hand, FHB who took that suggestion and bought when they were ready (circa 2021), are getting screwed by "bait and switch" interest rates and told they should have shown financial responsibility, while the banks get off scot-free for lack of prudent borrower testing along with some questionable test rate settings.
When interest rates were at 2.5% -3.0%, and banks were stress testing at 5-6%, there were borrowers complaining about being restricted in their lending by lenders - they were complaining about stress test rates being too high.
Borrowers willingly signed their credit contracts (i.e mortgages). No one was under any duress or pressure by the lender to enter into any credit contract. Both parties agreed to the terms in that credit contract. Each party agrees to abide by their respective responsibilities under those terms. In those contract terms are events of default, and if default occurs, the rights of each party are clearly outlined.
This is contract law.
If borrowers don't like the terms of the contract, then don't sign the contract.
Yup, we have already gone backwards and forwards on this. I don't recall borrowers complaining about being restricted by the test rates, they were probably complaining that they couldn't borrow enough due to rising house prices, but lowering the test rate further is not a prudent way of overcoming this.
But at the end of the day, the issue is really around exorbitant interest rate increases in such a short space of time, which I guess primarily falls at the hands of the RBNZ.
"which I guess primarily falls at the hands of the RBNZ. "
FYI, the RBNZ govenor gave this warning in Feb 2021.
https://i.stuff.co.nz/national/politics/300238808/reserve-bank-governor…
Given rising house prices at the time, house buyers of 2021 may have chosen to ignore these warnings.
It's muddled because people want certainties, and the future is too complex for even the best to accurately forecast.
The sad reality is the average worker, particularly if they're higher educated, is now facing a shorter working life to buy a house, with conditions that only seem to gravitate towards more difficulty. Even rougher currently, because it does seem like a hard time is coming, and we have an entire generation or two of workers that have no experience of mass layoffs and companies shutting down to know what might befall them, no matter how safe their job seems.
Everyone is going to have their own individual circumstances, but I know too many people later on in life who procrastinated and now have fairly grim options in front of them. This is only going to snowball from here.
If it goes more than 6 months I would say it’s something more than a dead cat bounce
As HM said, only time will tell if it's a dead cat bounce. But Poppy keeps saying it is a dead cat bounce nearly every day of the week, and twice already today. Dead cat bounce ( the term) really applies to stocks and shares market. I am aware that many have started to use the phrase for property, but there are different factors in play here.
I don't want to predict where the market will go over the next 12 months, but I do think people have adjusted their mindset to interest rates staying at 7% for "longer".
You omitted that I also used the term "Suckers Market" this week as well.
I'm pretty sure that you used that term much less frequently.
By the way, what's the beef between you and Nifty1?
One is very pro-property, the other is not
Alternatively, one political party is pro-affordable housing.
There will be a surge of listing post election regardless of outcome. A surge with few buyers at 8% cost of debt.
If Labours green win the spec crowd holding on for Nact will capitulate and exit. If Nact win spec crowd will wait for the reduction in taxable holding period and those that qualify will avoid the capital gain tax and bail.
Who can buy, how many are sitting on big deposits and excess cashflow to service at today's cost of debt...?
The smart people buy when interest rates are up, and that's now. Look what's happening to those that bought at low rates.....stagnant property prices and sky rocketing interest rates.
The article you linked RP was in 2017 where the Reserve Bank's warns: 'It's not our job to protect you from the housing market'... The average house price in 2017 was $600,000+/- In 2023 it's $950,000+/- ... We all know what Orr did over the pandemic to save the housing market and he's still the same guy running the ship. The RBNZ talks the talk but at end of the day, it's proven that the decisions they make always protect the market. The article you link also said that people thought it was 'the peak' in 2017, calling for LVRs to be scrapped. The RBNZ allowed more low deposit lending LOL... sound familiar?
Average house price graph: https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcTUJRVp4VaDRCMJdgj…
RP article: https://www.stuff.co.nz/business/99408539/reserve-bank-warns-its-not-ou…
Nifty1, are you implying the RBNZ priorities have drastically changed to the point where it is their job to protect house buyers from poor decisions (a guarantee if you like)? Are FHB's no longer being used as pawns in order to protect the wider financial system?
When did this happen? I MUST have been napping. Link please? Seriously now, look at the bigger picture for once - LOL!
This is comical :)
by Nifty1 | 30th Sep 23, 8:34am "If you've followed my comments I've said the games rigged, the Govt & RBNZ do whatever they can to prop up the market"
Now that you said so yourself, then comes the endgame Nifty1. This is the price for living and borrowing beyond our means as a country.
The RBNZ have been protecting the property market for years now. They are still protecting the property market because 8% interest rates are the maximum the market can handle. If they wanted to get serious about dropping inflation, rates would already be at 12% and that's not going to happen because it would be carnage in the housing market.
Yes good point. Given the RBNZ’s mandate, the OCR should be much higher than it is now. The only explanation is protecting collapse of the Housing ponzi.
Really, they should be pushing higher and pushing the limits of the ponzi’s tolerance. The ponzi has stabilised the last three months. If it really does start collapsing then they could potentially pull back on ‘financial stability’ grounds.
The corollary (unacknowledged) explanation is protecting Labour from the "collapse of the housing ponzi", increased inflation in domestic goods & services, unemployment, wage/salary demands...Back to the 1970s/80s ;).
I reckon early next year we'll see a similar statement issued by RBNZ to that when they stated slashing the OCR in 2008...
"Recent oil and food price increases mean that annual CPI inflation should peak around 5 percent in the September quarter of this year. However, we expect that inflation will return inside the target band in the medium term. The weaker economy is expected to reduce pressure on resources, making it more difficult for firms to pass on costs and for higher wage claims to be agreed.
"Economic activity is likely to remain weak over the remainder of 2008. The ongoing correction in the housing market, together with the very high oil prices, will limit household spending and constrain the extent of recovery.
https://www.rbnz.govt.nz/hub/news/2008/07/ocr-reduced-to-8-0-percent
Perhaps got 1 OCR increase left in them this year to try and tame the property market/inflation...
You dont really believe this dribble?? Property is going South big league from Nov 2023.
No it isn't mate. The rest of the world continues to go down the toilet faster than us. Its going to be nothing but Wars going forward for the resources and land that is still "Liveable" with climate change. There will be massive migration, its already doubled this year with those trying to get into the USA and at some point they will have to initiate an armed response to stop it.
Not so. Yes a price correction would occur. Not the end of days unless you are the few brainwashed into believing leverage always wins seminar stories.
Remember, the majority of houses have no mortgage. The vast majority had little to no mortgage. Accordingly protection looks to be more for the banking systems gloal owners and the seminar believers, rather that the average household or tax payer in NZ.
What is the Govts job again...?
Continuity.
At odds with capitalism.
I'll tell you what's living beyond our needs as a country.....Comrade Ardern and her fellow leftists wrecking the farming, mining, fishing and tourism industries. Billions for maoris, 15,000 more public servants and borrowing that will take decades to pay back paint a very sad picture.
NZ's future is very grim indeed if it continues.
"The RBNZ talks the talk but at end of the day, it's proven that the decisions they make always protect the market."
Just to clarify. By "market", are you referring to the
1) housing market
2) bond market
3) equity share market
4) other?
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